For more than 40 years, the disputed status of the Golan Heights has been one of the major obstacles to peace in the Middle East. Is a solution at hand?

Who controls the Golan Heights? Israel does, at least for now. But last month, Israel and Syria revealed that for the first time since 2000, they were negotiating the status of the disputed territory—a 460-square-mile plateau nestled amid the borders of Israel, Syria, Jordan, and Lebanon. Neither side is publicly discussing the talks, though the opposing positions are well known. Syria has long demanded that Israel return the Golan, which Syria acquired as part of its independence from France in 1944 and which Israel captured during the Six Day War, in 1967. Israel has responded that this won’t happen as long as Syria supports the radical Islamic groups Hamas and Hezbollah. Previous talks have gone nowhere. But now the two longtime enemies say they are pursuing a “serious and continuous” dialogue, and analysts are cautiously optimistic that a resolution can be found.

Why has Israel kept the Golan?For one thing, it gives Israel complete control of the Sea of Galilee, a large freshwater lake that provides the arid country with nearly a third of its drinking water. But the biggest reason Israel retains the Golan is its strategic military value: From atop Mount Hermon, Israel can look deep into Syrian territory and pre-empt any surprise attacks. That this buffer would be retained has been an article of faith among Israelis—at least until recently. (See below.)

What is the Golan like?Its lush, rolling terrain carries both the scars and the hopes of this historic land. Ruins from the third century attest to its past; radar towers and electricity-generating windmills mark its present. Fruit orchards and cattle ranches thrive on its fertile volcanic soil, as do vineyards that produce some of Israel’s finest wines. The Golan is also heavily militarized, rife with troops, minefields, and barbed wire.

Who lives there?There are currently 33 Jewish settlements, housing some 18,000 Israelis. For years, Israel tried to keep its people from moving to the Golan, fearing it would again become a battlefield. But more recently, the government has encouraged settlement. Some 400 families put down roots in the Golan annually, drawn by new industrial parks, microbreweries, and Israel’s only ski resort, which caters to about 2 million visitors a year. “We’re living our life as if we’ll be here forever,” says Moti Bar of the community of Kanaf.

Is there an Arab presence?Most of the Golan’s 100,000 Arabs fled during the 1967 war, and have not been allowed to return. Still, the area, which is less than half the size of Rhode Island, is home to about 20,000 Arabs. Most are Druze, a sect that split from mainstream Islam centuries ago. The vast majority consider themselves citizens of Syria. But a few have become Israeli citizens, overcoming their fears of Syrian retribution should the territory ever be returned to Damascus.

How does everyone get along?Remarkably well. Unlike many of their counterparts on the West Bank, the settlers in the Golan are primarily secular and do not view the area in biblical terms, as part of ancient Israel. So although the Golan’s Jewish and Druze populations sometimes argue—the Druze charge that Jews are allotted more water, for example—the two groups largely co-exist in peace. Indeed, Golan Arabs enjoy some of the benefits of two nationalities.

In what way?The Druze have residency rights that allow them to travel throughout Israel. At the same time, Druze can sell their produce to Syria, and they retain such Syrian benefits as free university education. Still, many Arab families separated by the 1967 war remain divided. The experience of Assad Mugrabi, a 58-year-old civil servant, is typical. After his daughter was allowed to enter Syria to marry a cousin in 1989, he didn’t see her again until last year, when they met in Jordan. “Every time I think of her, I start to cry,” he says. “She was just a small teenager when she left. Now she has children older than she was then.”

Might the Golan actually be returned to Syria?The odds remain long. For starters, public opinion polls indicate that two-thirds of Israeli citizens still oppose giving back the Golan. And returning the territory would involve many knotty problems, including compensating Israeli settlers and making up for lost commerce—the Golan provides Israel with 40 percent of its beef, 21 percent of its wine, and 50 percent of its mineral water. But under the right terms—a phased withdrawal over 15 years, perhaps, coupled with an agreement over water rights—it’s possible. The embattled Israeli Prime Minister Ehud Olmert, now immersed in a corruption scandal, is clearly open to a deal. In 2006 he called the Golan “an inseparable part of the state of Israel.” But last month he said, “We are ready to make substantial concessions to Syria that will be quite painful. I am convinced that the possibility of success is greater than the risk.”

Changes on the high groundWhen Israel captured the Golan in 1967, it was assumed that it would never give up so strategic an asset, one that afforded commanding views of enemy positions in Syria. Indeed, shortly after the Six Day War, the U.S. Joint Chiefs of Staff issued a report recommending that Israel hold onto the area indefinitely. But today, a number of Israeli generals and politicians, including former Prime Minister Shimon Peres, are expressing openness to the notion of relinquishing the Golan. It’s not that they suddenly trust Syria, which in 1973 launched a surprise attack to try to retake the area. Rather, they say, Israel’s improved radar systems, listening devices, and air power now enable it to detect and fend off any imminent attack from Syria, thus reducing the need for an actual physical presence in the Golan. “Technology has developed in such a way to favor the defender very much,” says Martin van Creveld, one of Israel’s most prominent military historians. “With the advent of precision-guided munitions, you no longer need to be ‘up there’ to hit them ‘down there.’”